Importance to Organizations in the Twenty-First Century
1.1 Purpose of the assignment
This proposal is going to provide a case study of Marketing strategies, Hennes & Mauritz AB had successfully re-import the formula of low-priced, quality fashions that had inspired its beginnings more than 50 years before. This assignment draws all the marketing mix that allows Hennes & Mauritz AB to organize a wide range of subsidiaries and develop its product brands. The focus of the report is to show via any organization what marketing is, how this organization uses marketing strategies and techniques, why marketing is essential to Hennes & Mauritz AB, and how its use of marketing has changed and will change in the future.
1.2. Company’s Background
Hennes & Mauritz AB (operating as H&M) is a Swedish retail company, known for its inexpensive and trendy retail offerings primarily for men and women 18 to 45, children’s apparel, and cosmetics brands. The company designs cheap but chic clothing. It was founded in 1947 by Erling Persson in Västerås, Sweden, although it only sold women’s clothes and was called Hennes, Swedish for “hers.” In 1968 Persson bought the premises and products of Mauritz Widforss, a hunting equipment shop in Sweden. Included in the list was a supply of men’s clothing, prompting Persson to expand into menswear. So he renamed the shop Hennes & Mauritz, which was later abbreviated to H&M. H&M has over 1300 stores in 29 countries and direct distribution operations in selected areas and hires more than 50,000 staff.
Marketing is one of the operative functions (as distinct from the managerial role) of management. The modern concept of marketing is different from the traditional concept.
2.1 Traditional concept
According to traditional views, marketing is the process by which goods are made available to consumers by the manufacturers. Thus the conventional idea of marketing focuses merely on the physical process of distributing products and services.
2.2 Modern concept
According to the modern view, marketing consists of sensing, stimulating, servicing, and satisfying the needs and wants of present and potential customers more effectively and efficiently. The modern marketing philosophy holds that the essential role of the organization is to assess the customer’s desires, expectations and values and to adapt the organization to deliver the desired service more effectively and efficiently than its rivals. There are two vital elements of this concept.
- Customer orientation and
- Integrated marketing planning and control with other departments like manufacturing, finance, inventory control, and so on.
2.3 Elements of the modern concept of marketing
The modern concept of marketing has the following two elements as under:
- Customer Orientation – identifying and determining the wants and requirements of customers through marketing surveys, forecasting, and researches
- Integrating the marking planning and control with those of other departments (like manufacturing, finance purchase, inventory control, personnel research, and development), keeping in view the ultimate goal of customers’ satisfaction. It should be noted that consumers deserve convenience not only in terms of genuine and safe goods and services, but also many other factors such as a timely and consistent supply of fair price for production / services, the availability of effective after-sales service, etc.
3. Marketing Management
Marketing management consists of planning, coordinating, directing and monitoring the marketing efforts of products and services in order to meet the customer’s wishes.
According to Philip Kotle,
“Marketing management is the study, planning, execution and control of programs designed to develop, establish, sustain mutually beneficial exchanges and relations with target markets in order to achieve organizational objectives.”
3.1 Objective of marketing management
Mintzberg defines a mission as follows:
“A mission identifies the primary role of the company in society with regard to the goods and services it provides for its clients.”
The essential objectives of marketing management are shown below.
(a) To create demand
Marketing management enables the firm to determine what the customer needs and wants, and then to design the products/services in tune in addition to that and make the utilities of those products/services known to customers in advance and thus, to create demand. The steps involved in creating demand can be shown as
(b) To capture a share in the market
After creating the demand for the product in the market, the firm wants to win a share in the market. Marketing management enables the firm to capture a reasonable share in the market through appropriate advertising and other promotional activities
(c) To build and promote the reputation
Marketing management allows the firm to develop and encourage esteem through various
Image building activities, e.g., prompt and regular supply of products/services f required quality at a reasonable price, availability of efficient after-sales service, and so on.
(d) To attain the long term goals
Marketing management enables the firm to attend the long-term goals, growth, and stability through customer’s satisfaction and customers and earning reasonable profits. Hence the objectives of marketing are not the maximization of benefits through the volume of sales but profits through the satisfaction of customers,
Thus modern marketing starts with the customers and ends with the customers.
3.2 Functions of marketing
The scope of marketing is very vided. It may be analyzed in terms of marketing functions. Marketing functions are inherent in ever marketing process, and these functions may have to be performed many times in the marketing of a given product.
Functions of Exchange
Functions of exchange refer to the services, which are concerned with the exchange or transfer of goods from the producer to the customers. These include the following:
(a) Buying and assembling– buying as a part of marketing function mean the purpose of raw materials for use in manufacturing purchase of finished goods for resale Assembling involves the collection of the same type of products brought from different places under a standard roof.
(b) Selling means finding the customers and transferring the goods to them for value or money. Selling function involves performing the following activities:
- (i) Identifying buyers
- (ii) Finding out their preferences
- (iii) Pursuing them to buy the goods
- (iv) Negotiating the terms of sale, mode of delivery, payment, and deciding upon the after-sale services to be provided.
2. Functions of Supply
Tasks of physical supply refer to the services, which are concerned with the physical amount of the goods. These include the following:
(a) Transportation – Transportation refers to the physical movement of products from production to the areas of consumption. By carrying the gods to such areas where they are needed, it creates place utility.
(b) Storage and warehousing – Storage is the process of holding and preserving goods during the time of purchase/ production and the time of their sale/use. Warehouse facilitates the storage function by bridging the gap between the time of production and consumption; storage creates time utility.
3. Facilitating Functions
Facilitating functions refer to those, which promote marketing. These include the following:
(a) Marketing research is the systematic investigation of the facts relevant to various aspects of marketing to facilitate the decision-making process. It may be conducted on any marketing problem, e.g., product selection, product design, pricing policies, distribution channels, sales promotion techniques, etc. The objectives of marketing research include the following:
(i) To find out the scope of introducing a new product
(ii) To select the product to be introduced
(iii) To design the product
(iv) To decide about the price of the product
(v) To choose the distributions channels
(vi) To adopt the appropriate sales promotion techniques
(vii) To get the feedback of the existing products
(viii) To track business success and their market strategies
The marketing research function allows the management to make various marketing decisions based on factual information (supplied by marketing research) rather than on bunch.
(b) Product planning and development are concerned with anticipating customers’ needs, developing new products, and improving the existing outcomes so s to meet customer expectations. The function is concerned with what to produce and for whom to produce. Keeping in mind the needs of the customer, the product is planned, developed, and improved to satisfy their needs.
(c) Standardization and grading-standardization refer to set specific standards for a product based on its desired qualities. When the products are standardized, and the customers are aware of it, they are not required to verify those products’ conditions. Grading refers to the division of products into lasses made up of units possessing similar features following the predetermined standards.
(d) The packaging is the act of designing and reducing the package for the product. It reduces the risk of spoilage, breakage, leakage, etc. In the process of storage and transportation of goods by providing a protective cover for the products. It also provides useful product information in printed form. A package is a wrapper or container which includes, encloses or seals a product.
(e) Branding is the act of designing and producing a brand (label for a product to create a distinct image of the product in the market. A brand is a name, sign symbol design, or a combination of all used to distinguish one firm’s product from that of the others.
(f) Pricing is the process of fixing the price of a product or a service. Generally, the firm bases its pricing policies on an overall assessment of three factors- the cost of production, the demand for the product, and the nature and extent of competition.
(g) Promotion refers to all the activities designed by the manufacturer to influence buyer’s behavior to make the product and price known and acceptable to customers. Advertising personal selling, displays, demonstration, posters, banners, etc. are all examples of promotional activities.
(h) Financing concerning marketing refers to the provision of the money and credit necessary for the producer or seller to male goods available to the customers. The provision of confidence in the course of marketing gives rise to the need for finance.
(i) Risk-taking – Marketing involves several risks, which may be due to natural or human-made factors. The various types of risk are summarized as under
4 Competitive analysis
Business is taking place in a steeply competitive, volatile environment, so it is essential to understand the competition. (SBA, Competitive Analysis.)
No product in the market uses the same casual, down-to-earth yet fashionable image clothing as that of H&M’s broad patent coverage. It will prohibit other market participants from legally marketing any products with the same technology in the market for the next ten years of the valid patent period.
4.1 Market and Customer Analysis
“Marketing research, according to the American Consumer Association, is the systematic compilation, documenting and review of data on marketing issues related to products and services” (SBA, Marketing Research).
Although market research is an imperfect science, it deals with customers, and their continual changes feel and behaviors, which are influenced by innumerable subjective causes. (SBA, Marketing research.)
4.2.1 The market and its customers
5. The marketing activities
5.1 Marketing mix
The marketing mix represents the entire marketing program of H&M LEARNING. It involves decisions with regards to product, price, place, and promotion. The marketing mix serves the linkage between a business firm and its customer. Thus marketing mix is a blending of decisions in the 4 Ps. It is a system comprising the subsystems of product, promotion, and distribution. These elements of the marketing mix are interrelated because decisions in one area affect the others. The marketing mix is a dynamic concept as it keeps on changing with changes in markets and the environment
Philip Kotler has defined the term marketing mix as “the set of controllable variables that the firm can use to influence the buyer’s response.” (59)
The marketing mix denotes a combination of various elements, which, in their totality, constitute H&M LEARNING’s
“marketing system.” These elements are often described as FOUR P’s: Product, Price, Distribution (Place), and Promotion.
To fulfill the objectives, several variables have to be incorporated into the elements of the marketing mix:
o Product – must be high in quality.
o Price – must be at a premium price/high value.
o Promotion – media and merchandising coverage.
o Place – must be available at local shops, supermarkets, and other retail outlets.
o People – people provide most services.
o Physical evidence – must illustrate the service quality through physical evidence.
o Process – choose among different methods to deliver the service.
Thus, Human Resource in the H&M LEARNING system has designed a marketing mix to analyze the mark the marketing problems. The problems are analyzed:
(a) By utilizing the importance of emanating from the market, which influences the marketing problem operations of H&M LEARNING. For example, product acceptance, demand, price, etc.
(b) Adopting, procedures, and policies for an efficient marketing program. For example, distribution policies, promotional strategies, etc.
The product will effectively be introduced into its new market, incorporating the primary factors and variables which consumers deemed urgent/wanted in an electronic dictionary market. Positioning the product as a product’ high in quality’ will satisfy the needs of the consumer. It will also portray the product as being fashionable. This will form the basis of the products’ unique selling point (USP). However, using USP alone to generate sales will be insufficient. Other elements within the marketing mix should be considered to further assist in forming favorable attitudes and creating intentions to purchase. Merely relying upon price and the actual product as a differentiator from the competitors would be inadequate (KOTLER, 2003).
6. Marketing Concepts Of Hennes & Mauritz Ab
In 1980, H&M under managing director Stefan Persson continued its international expansion, steadily opening new stores, while retaining tight control of the H&M image.
Company Perspectives and Customer orientation
H&M ‘s corporate philosophy is “Design and quality at the best price.” It has a design and buying department, which creates H&M’s collections, making it possible to offer the latest fashions. H&M ensure the best price for their goods by doing market survey and research and acquiring depth and breadth of knowledge within every aspect of textile production; buying the right products from the right market, buying large volumes and efficient distribution mechanism.
(i) Measures were implemented to secure and raise the quality of the goods, and by tightening the quality standards,
(ii) Developing and improving its suppliers.
(iii) Carry out careful and adequate quality controls. The garments are manufactured without the use of environmentally hazardous chemicals or harmful substances and that they are produced under ethical working conditions.
Diversification of business
By 1970, Hennes & Mauritz added a line of children’s clothing to its stores; the company introduced clothing for much of the family. Clothing for teenagers and babies was added in 1976 and 1978 as a continuation of diversification. Diversification of Mauritz expands the company’s clothing range and transform the company’s product offering itself.
For the new generation, youth Hennes & Mauritz started sportswear, led the company to H&M began to develop the casual, down-to-earth yet fashionable image clothing that marked its success.
Stefan Persson had been quick to recognize the emergence of fashions and trends–born of MTV, Hollywood, Madison Avenue advertising, and the revolutionary Internet piercing the protective cloak of the most insular of nation-states Globalization of Innovation is the key for the production as well as the processing of knowledge in H&M, for last few decades. Stefan Persson described the time as “global fashion.” With its emphasis on uniformity among its stores, H&M was well-positioned to appeal to this new generation of consumers.
As an agreement with the times, the H&M, also lined up in its store a new line of clothes, under the BiB (Big is Beautiful) brand name.
International Expansion and capturing market
H&M embarked on its global expansion and entered the Netherlands in 1989, the company moved into Belgium in 1992, Austria in 1994, and Luxembourg in 1996. The company’s sales had topped SKr 13.5 billion by 1994. That same year, the German stores at the business surpassed Sweden to become the largest single market for H&M. H&M continued its International expansion and opened some 60 or more stores per year. In 1997, H&M entered Finland; the following year, France was the next market to be tapped as six H&M stores appeared in Paris. On 31 March 2000, H&M opened its first American store on the famed Fifth Avenue in New York. Following the success of that flagship store, additional stores were opened in the Gramercy, and Herald Square areas of Manhattan, followed by several mall locations H&M opened, in 2006, a store in Dubai’s Mall of Emirates.
H&M expanded into Asia in March 2007, with its first store opening on 68 Queen’s Road Central, Hong Kong H&M has proposed, to open stores in Australia in 2008
7. Risks and Contingency Plan
7.1 Market uncertainties
To be an entrepreneur who has ideas that occur on a daily essence. The real challenge, though, is to gather good ideas. Good intentions are more than just ideas – they are opportunities. (MULLINS, 2004)
As a new product concept, H&M products have been tested in the market. While H&M is confident about the technology and product, and are in the process of conducting both consumer and competitive research to prove more accurately the market potential for H&M brands.
7.2 Threats from imitation
As the protection of intellectual property rights is rather weak in Asian countries even though H&M is unique, it is still possible that other companies, especially those that are producing similar products, may imitate the H&M concept and technology. When this kind of scenario happens, H&M will seek legal counsel and fight against the imitators.
7.3 Technical Risk
With technology advancement, there is always the possibility that disruptive or superior marketing technology would replace H&M or provide the same benefits at a lower cost. Thus, H&M would continuously improve their marketing and brand technology and products to meet consumers’ ever-changing needs.
8. Marketing Environment
Marketing activities are influenced by several factors inside and outside the business firm. These factors or forces influencing marketing decision-making are collectively called the marketing environment. It comprises all these factors, which have a san impact on the enterprise’s market and marketing efforts.
According to Philip Kotler, marketing environment refers to
“Eternal influences and forces influencing the ability of the company to establish and sustain productive transactions and relationships with its target customer.”
The marketing landscape can be commonly broken down into two pieces
- Macro environment
Microenvironment implies the factors and forces in the immediate environment, affecting its ability to serve its market.
These factors are given below:
- Market intermediaries
The macro-environment refers to those factors, which are external forces in the company’s activities and do not concern the immediate environment. The macro-environment is uncontrollable factors, which indirectly affects the concerns the ability to operate in the market effectively.
The components of the macro-environment affecting the company are as stated under
(a) Demographic forces
(b) Economic forces
(c) Political and legal forces
(d) Social and cultural forces
(e) Physical forces
(f) Technological forces
Competition in the market had been growing. One of the competitors represented almost 90 per cent of the country’s overall production. Many independent producers contributed the balance of 10 per cent alone. H&M felt they would need an entirely different approach to the marketing environment to seize a share in the market held by the competitors. They had plenty of financial resources but were in two minds. Before a decision was taken, the management examined the sales possibilities if a revised marketing strategy was adopted.
Thinking about the future
H&M effectively re-imported the concept of low-priced, affordable fashions in its existence that had influenced its beginnings more than 50 years ago. H&M has full line up goods in the European market. As a result, it will become increasingly difficult for them to make incremental strides in their market share acquisition.
H&M must remain adaptable and agile with the ability to make rather quick design changes to appeal to the tastes of the public and keep up with rapid changes introduced by a smaller rival in the market. At some point, after market saturation, he may return to a changed one
“Multipronged” approach, reflecting their ability to dominate the market, altering their marketing strategy to meet the market’s unique needs as determined by their cultural and economic climate.
Bibliography & Reference
- BARROW, C., BURKE, G., MOLIAN, D. and BROWN, R. (2005) Enterprise development: the
- Challenges of starting, growing, and selling businesses. London: Thomson.
- BURNS, P. (2001) Entrepreneurship, and small business. Basingstoke: Palgrave Macmillan.
- DOUGLAS, E. and JEREMY, P. T. (1998) Getting business to come to you. The USA.
- GUPTA CB & NAIR NR, (2006). Marketing Management. Educational Publishers. New Delhi.
- “FASHION GURU,” Financial Times, May 17, 1999.
- FITCHETT, JOSEPH, “Will Cheap-Chic Win Over Stylish French?,” International Herald
- tribune, March 13, 1998.
- “Hennes & Mauritz: Knickers to the Market,” Economist, February 28, 1998
- HUGHES, V and WELLER, D. (2003) Setting up a small business. London.
- KOTLER, P. (2003) Marketing Management, 11th ed., America: Prentice-Hall.
- MULLINS, J. W. (2004) The new business road test. Harlow: Financial Times/Prentice Hall, pp. 201
- Alibaba.com (2006) Electronic Dictionary. [cited on 8th January 2006] <http://hotproducts.alibaba.com/manufacturers-exporters/Electronic_Dictionary.html>
- Bizhelp. (2005) The basics of starting a new business. [on line]. [cited on January 2, 2006] <http://www.bizhelp24.com/business_start_up/start_a_new_business_how_to.shtml>
- Hennes & Mauritz AB. [On line]
- H&M, Wikipedia. [On line]
- SBA. (no date) Marketing research. [on line]. [cited on January 3 2006] <http://www.sba.gov/starting_business/marketing/research.html>
- SBA. (no date) Competitive Analysis. [on line]. [cited on January 5 2006] <http://www.sba.gov/starting_business/marketing/analysis.html>
- Startup. (2006) Start your business. Step 4: Select a structure. [on line]. [cited on January 4, 2006] <http://www.st